A Firm Is Considering the Purchase of a Capital Good

question 76

Multiple Choice

A firm is considering the purchase of a capital good that will generate an additional $40,000 income each year for 4 years (after which time the capital good is useless and has no scrap value) . The interest rate is 4 percent. It follows that the firm should not purchase the capital good if its price is greater than (approximately)

• A)$135,800.
• B)$111,004.
• C)$160,200.
• D)$174,915.
• E)$123,318.

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Definitions:

Constitutional Amendment

A formal change or addition proposed or made to a constitution, altering its provisions or principles.

Jury Trial

A legal proceeding in which a jury makes a decision or findings of fact, which then directs the actions of a judge.

Grand Jury

A group of citizens convened to decide whether there is enough evidence for a criminal case to go to trial based on the presented evidence.

Closed Session

A private meeting or part of a meeting from which the public and media are excluded, typically within a legislative or judicial setting.